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Chapter 2
Chapter Topics
Model Formulation
Objectives of business decisions frequently involve maximizing profit or minimizing costs. Linear programming uses linear algebraic relationships to represent a firms decisions, given a business objective, and resource constraints. Steps in application: 1. Identify problem as solvable by linear programming. 2. Formulate a mathematical model of the unstructured problem. 3. Solve the model. 4. Implementation
Model Components
Decision variables - mathematical symbols representing levels of activity of a firm. Objective function - a linear mathematical relationship describing an objective of the firm, in terms of decision variables - this function is to be maximized or minimized. Constraints requirements or restrictions placed on the firm by the operating environment, stated in linear relationships of the decision variables.
Parameters - numerical coefficients and constants used in the objective function and constraints.
Labor (Hr./Unit) 1 2
Clay (Lb./Unit) 4 3
Profit ($/Unit) 40 50
Product mix problem - Beaver Creek Pottery Company How many bowls and mugs should be produced to maximize profits given labor and materials constraints? Product resource requirements and unit profit:
Non-Negativity Constraints:
Feasible Solutions
A feasible solution does not violate any of the constraints: Example: x1 = 5 bowls x2 = 10 mugs Z = $40x1 + $50x2 = $700
Labor constraint check: 1(5) + 2(10) = 25 40 hours Clay constraint check: 4(5) + 3(10) = 70 120 pounds
Infeasible Solutions
An infeasible solution violates at least one of the constraints: Example: x1 = 10 bowls x2 = 20 mugs Z = $40x1 + $50x2 = $1400
Graphical solution is limited to linear programming models containing only two decision variables (can be used with three variables but only with great difficulty).
Graphical methods provide visualization of how a solution for a linear programming problem is obtained.
X2 is mugs
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
X1 is bowls
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Alternative Objective Function Solution Lines Graphical Solution of Maximization Model (8 of 12)
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Figure 2.9 Alternative objective function lines for profits Z of $800, $1,200, and $1,600
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Extreme (Corner) Point Solutions Graphical Solution of Maximization Model (11 of 12)
Maximize Z = $40x1 + $50x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Optimal Solution for New Objective Function Graphical Solution of Maximization Model (12 of 12)
Maximize Z = $70x1 + $20x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0
Slack Variables
Standard form requires that all constraints be in the form of equations (equalities). A slack variable is added to a constraint (weak inequality) to convert it to an equation (=).
Max Z = 40x1 + 50x2 + s1 + s2 subject to:1x1 + 2x2 + s1 = 40 4x2 + 3x2 + s2 = 120 x1, x2, s1, s2 0 Where:
x1 = number of bowls x2 = number of mugs s1, s2 are slack variables
Minimize Z = $6x1 + $3x2 subject to: 2x1 + 4x2 16 4x2 + 3x2 24 x1, x2 0
Minimize Z = $6x1 + $3x2 subject to: 2x1 + 4x2 16 4x2 + 3x2 24 x1, x2 0
The optimal solution of a minimization problem is at the extreme point closest to the origin.
Figure 2.18 The optimal solution point
Subtracting surplus variables in the farmer problem constraints: 2x1 + 4x2 - s1 = 16 (nitrogen) 4x1 + 3x2 - s2 = 24 (phosphate)
Minimize Z = $6x1 + $3x2 + 0s1 + 0s2 subject to: 2x1 + 4x2 s1 = 16 4x2 + 3x2 s2 = 24 x1, x2, s1, s2 0
For some linear programming models, the general rules do not apply. Special types of problems include those with: Multiple optimal solutions Infeasible solutions
Unbounded solutions
The objective function is parallel to a constraint line. Maximize Z=$40x1 + 30x2 subject to: 1x1 + 2x2 40 4x2 + 3x2 120 x1, x2 0 Where: x1 = number of bowls x2 = number of mugs
An Infeasible Problem
Every possible solution violates at least one constraint: Maximize Z = 5x1 + 3x2 subject to: 4x1 + 2x2 8 x1 4 x2 6 x1, x2 0
An Unbounded Problem
Value of the objective function increases indefinitely: Maximize Z = 4x1 + 2x2 subject to: x1 4 x2 2 x1, x2 0
The decision is represented in the model by decision variables. The problem encompasses a goal, expressed as an objective function, that the decision maker wants to achieve. Restrictions (represented by constraints) exist that limit the extent of achievement of the objective. The objective and constraints must be definable by linear mathematical functional relationships.
Establish Model Constraints x1 + x2 = 1,000 lb x1 500 lb of chicken x2 200 lb of beef x1/x2 2/1 or x1 - 2x2 0 x1, x2 0
The Model: Minimize Z = $3x1 + 5x2 subject to: x1 + x2 = 1,000 lb x1 50 x2 200 x1 - 2x2 0 x1,x2 0
Maximize Z = 4x1 + 5x2 subject to: x1 + 2x2 10 6x1 + 6x2 36 x1 4 x1, x2 0 Step 2: Determine the feasible solution space